Optimism price could suffer a correction as on-chain metrics turn bearish

Optimism, a low-cost Ethereum Layer 2 chain has offered nearly 4% daily and 65% weekly gains to holders. OP price is $3.61 at the time of writing, as the Layer 2 token climbs despite bearish on-chain metrics.

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Optimism on-chain metrics are bearish

Optimism chain’s large wallet transactions valued at $100,000 and higher increased between December 3 and 23, as seen in the chart below. The spike in whale transactions coincides with the Network Realized Profit/Loss spikes. This indicates that large wallet investors are taking profits as OP price rallies.

Profit-taking typically precedes a correction in an asset and OP price could decline in response to whales realizing their gains in large numbers. 

Whale transactions and Network Realized Profit/Loss. Source: Santiment

The MVRV Market Value to Realized Value ratio on a 30-day timeframe has climbed to 66.17% as seen in the Santiment chart below. Typically, everytime the MVRV metric hits a local peak, there is a corresponding correction in price and the current level is the highest in the past six months.

It is likely that OP is poised for a correction in the short term.

MVRV Ratio and price. Source: Santiment

Another key on-chain metric, Network Growth reveals a bearish divergence in OP. Despite OP price growth, Network Growth did not increase, it remained well below the average level throughout December. 

Network Growth. Source: Santiment